Competition

Optus fined $10 million after charging thousands of customers for ringtones “they did not need or want”

Dominic Powell /

Optus

General photo of an Optus store in Melbourne, Australia, taken on Tuesday, June 19, 2018. Source: AAP Image/Luis Ascui.

One of Australia’s largest telecommunications companies Optus has been fined $10 million by the country’s competition watchdog after charging unknowing customers for games and ringtones.

In a case similar to one faced by Telstra last year, Optus was found by the Federal Court to have misled consumers and breached the Australian Securities and Investments Commission Act (ASIC act) after it charged hundreds of thousands of customers for digital content through its direct carrier billing service (DCB).

This service allows users to make purchases of content such as games and ringtones without having to enter in credit card or bank details, charging it instead to the customer’s bank account.

Optus fell foul of consumer protections and the ASIC act when it failed to notify customers DCB was on by default on their accounts, and that they would be billed by Optus for any content bought, even if bought unintentionally.

Additionally, Optus admitted it knew customers were being unintentionally and mistakenly charged for these purchases, from which the telco was making a commission.

“In many cases, Optus customers had no idea they were buying anything, and certainly did not need or want the content for which they were being charged,” Australian Competition and Consumer Commission (ACCC) chair Rod Sims said in a statement.

“Optus failed to take appropriate action, choosing instead to continue to charge customers and collect commissions on these sales, even after numerous complaints.”

The $10 million fine issued by the ACCC is tied for the largest imposed by the courts, with Telstra being fined $10 million last year for similar conduct.

Optus has begun the process of refunding affected customers, with 240,000 customers and third-party providers so far refunded, costing the company an additional $21 million.

Speaking to SmartCompany, commercial lawyer and director at Viridian Lawyers Richard Prangell says the dual $10 million fines to Australia’s largest telcos are a sign the ACCC isn’t playing when it comes to this sort of misconduct.

“They’re actively making an example of the biggest telcos, it’s quite telling,” he says.

“I do think this will have ongoing ramifications and will be a trend as we see consumers become more and more digital. Big business is increasingly able to sneak these fees and charges into their products.”

For SMEs, Prangell says the key to not falling foul of similar misleading conduct is to have any terms disclosed clearly upfront and clearly identify.

“The key is disclosure. If there are fees and penalties associated with your product, make sure your customers are aware of them,” he says.

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Dominic Powell

Dominic is the former features and profiles editor at SmartCompany.

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